Is Industry 4.0 the new OpEx?

Blog

20 Apr 2020
This question will be answered with yes or no depending on where it is asked, more specifically at which company department or hierarchical level it is asked. In any case, Industry 4.0 and Operational Excellence (OpEx) seem to be strongly connected. Read on to find out more.

The (classic) story of OpEx or Six-Sigma

Usually the answer is yes because the input and development of Industry 4.0 projects (or transformations) are the result of studies and analyses using quite a few OpEx tools. The obvious focus areas here are process and lead times. Concepts such as (non-)added value or business added value are all presented at the same time.

This is perfectly in line with the considerations about or striving towards a lean process aiming to eliminate all waste or reduce it as much as possible. Many have heard about the acronym TIM (R) WOOD and know all the abbreviations such as 5S, SMED, VSM and OEE. For those tools OpEx is the objective. They want to achieve the level of World Class Manufacturing (WCM) companies.

“Following a lean path is step 1, but that is no guarantee that the process or service provision will flawlessly deliver the right quality and quantity.”

However, when a lean path is carefully followed on a daily basis, this still does not guarantee that the process or service will flawlessly deliver the right quality and quantity. Machines can malfunction or break down, people often work at a different pace on Monday mornings than on Friday afternoons. Companies often use the Six-Sigma methodology to identify variations in their processes or services. A lot of information is collected (from historical data) or a data collection plan is set up to gather missing information. All this is done in the hope of finding the root cause of any variations in order to eliminate them. In another article we give tips for successful Operational Excellence projects.

Undoubtedly many companies today still either measure and store huge amounts of data in an ERP/MES environment and often do very little or nothing with it, or they measure too little or even nothing at all and are actually blindly reproducing the routine that developed over time day after day.

One company may have loads of KPIs and graphs that may or may not be shared with employees and/or visitors, whereas the other company may have hardly any. One company may use KPIs to position or adjust its direction, and another company may not respond until its financial services department makes a remark that something is going on. One company will base its investments on data, while another will follow a proverbial gut feeling due to a lack of data and therefore a lack of analysis.

Industry 4.0, a logical and modern sequel to OpEx

When a company decides to make more data-driven decisions, Industry 4.0 comes into play.In that case, the answer to the question ‘Is Industry 4.0 a new name for OpEx?’ is usually no.

However, Industry 4.0 seems to be the logical expansion and further evolution of all OpEx tools, whereby having sufficient measurement data available quickly in an easy and visually interpretable format is a must. If we want to achieve sufficient data quickly and easily in an operational context, the next obvious step is automation: the automation of the measurement, analysis and presentation of measurement data in order to manage operations better and base strategic decisions on data.

Many companies still collect a lot of measurement data manually on paper. This data is then entered into Excel files so it can be analysed and presented to managers and/or management. This often means that several people use and manipulate the data – with all possible manipulation errors associated with it – before the measurement data is transformed into useful information that hopefully answers a question or resolves a problem. However, what often happens is that new questions or problems arise as a result of different interpretations of this information. There are many reasons why Operational Excellence can fail: read them why operational excellence may fail.

“That is exactly where Industry 4.0 can/will make a difference. Automating the measurement and processing of measurement data will be much faster and more accurate.”

business intelligence

Industry 4.0 can and will make a difference there. Various measurement automation applications exist already. Some are simple and easily accessible, but others are more complex and therefore slightly more expensive. They make measurement data processing much faster and more accurate. For example, if we use Power BI instead of MS Excel, data can be displayed flawlessly and often individually adapted to the user’s needs in real time on the user’s mobile device.

For example, a CEO who is waiting for their flight at the airport can check online and in real time whether the strategic objectives are on track, while a maintenance supervisor can help analyse a technical problem in the field from home at night. Dreams can come true if the old methods of pen, paper and Excel are replaced by (often simple) new technological applications.

The road to Industry 4.0

Of course, taking the next step in the OpEx story towards Industry 4.0 requires a change within the company: this change starts at management level, but also involves the people on the shop floor every day. It is cultural change, and that takes time.

Industry 4.0 is about more than just installing some extra measuring sensors and PLCs. The hardware modifications are often the easiest and quickest to implement. Devising and analysing the architecture required in advance is much harder. What do we want to measure/know? How often are we going to take measurements? Who needs this information? How are we going to visualise the data? Should the information and visualisation also be accessible in real time and remotely? How much data volume will we have to process? How will we process and store the data? Is Excel still powerful enough? Will data need to be exchanged with other software packages? Will the data be allowed/required to make immediate adjustments in the process with or without human interaction? Will data be used for AI, AR or VR? What about back-up and online security? The list of questions goes on, and all of them need to be carefully considered in advance. It is also best to perform a risk analysis before any action is taken. Only the right considerations in advance will determine the success of the result after implementation. This may look like we are trying to find solutions for problems that don’t exist, but experience has taught us that decisions are often made too quickly or too unilaterally. And this only increases the cost of retrofitting.

“Only the right considerations in advance will determine the success of the result after implementation. This may look like we are trying to find solutions for problems that don’t exist, but experience has taught us that decisions are often made too quickly or too unilaterally.”

It is clear that all these competencies of OpEx, change management, architecture and ICT are hardly ever present in a single person. This also explains why many (large) companies are hesitant to get on with 4.0. A lack of budget or resources is often suggested, but it is more likely that people are having difficulties with the awareness process: a belief that a few years from now, Industry 4.0 will mean the difference between leading the way and simply surviving in the industry at a regional and international level.

“The internal safeguarding and transfer of the knowledge and competence provided by an external partner are crucial to good cooperation. A company must (be able to) retain its individuality rather than become dependent on external know-how.”

It is clear that companies eager to take this step must be able to mobilise their employees, top down and back. They often hire a reliable partner to do this. The external partner must be able to deploy the right people to provide expert guidance during all the advance considerations, the implementation, training and coaching and any subsequent follow-up. The internal safeguarding and transfer of the knowledge and competence provided by this external partner are crucial to good cooperation. A company must (be able to) retain its individuality rather than become dependent on external know-how. Awareness and belief are what this is all about.

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Kris van Nieuwenhove operational excellenceKris Van Nieuwenhove is an operational excellence expert at Pauwels Consulting. He has over 15 years of experience with Black Belt and Green & Yellow Six Sigma projects in various sectors. He gives himself 200% each time and loves to coach others in their OpEx role. Providing change management and a team with the right tools are crucial to the success of a project.